OECD cuts China 2014 growth forecast to 7.4%
The OECD attributed the slower growth forecast to Beijing's efforts to rein in the shadow banking sector, overcapacity in such industries as steel and cement and a cooling property market. Many real estate developers and local governments have relied on shadow banking credit such as trust loans and other forms of off-balance sheet borrowings to stay liquid.
"Investment may slow more than projected if the supportive measures fail to counterbalance the effects of the phasing out of excess capacity and the anti-corruption campaign," the OECD report said.
"Consumption may also surprise on the downside if a cooling property market were to damp housing-related spending and weak income growth were to curtail spending on durables."
The government is trying to restructure the economy so it is driven more by consumption than the traditional engines of exports and investment, but wants to avoid a sharp slowdown that could fuel job losses and threaten social stability.
"The pace of structural reforms will influence short-term outcomes, the challenge being to keep up sufficient momentum to reduce imbalances whilst avoiding overly abrupt adjustments that might trigger a crisis," the OECD said.
(Reporting by Kevin Yao; Editing by Jacqueline Wong)